CSR and Competitiveness. A Synopsis

¶ … CSR and Competitiveness. A synopsis of the content is given followed by a specification of the thesis's main point. Three supporting opinions/reasons for this thesis are outlined, as well as three opposing opinions/reasons. Finally, a summary and opinion of the thesis is presented.

Exploring the Nature of the Relationship between CSR and Competitiveness

The following paper reviews the article Exploring the Nature of the Relationship between CSR and Competitiveness (Villanova, Lozano & Arenas, 2009). A synopsis of the content is given followed by a specification of the thesis's main point. Three supporting opinions/reasons for this thesis are outlined, as well as three opposing opinions/reasons. Finally, a summary and opinion of the thesis is presented.

Article Synopsis:

Villanova, Lozano and Arenas (2009) explore the relationship between corporate social responsibility (CSR) and organizational competitiveness. In the definition of CSR, the authors surmise that the concept centers on the role organizations should play in society. The five dimensions of CSR include: vision (the governance, ethical codes and practices a company adopts to promote CSR), community relations (the collaborations and partnerships to facilitate community action), workplace (the labor practices an organization employs), accountability (corporate transparency in its operations), and marketplace (CSR practices undertaken by the organization in relation to their core business activities). Although promoters of CSR practices encourage organizations to implement these facets into their organizational strategies, the question arises whether or not CSR benefits competitiveness.

Competitiveness is a multidimensional concept which can be defined as an organization's strength compared to that of a competitor. Kay described four factors that affect competitiveness: the capacity to innovate, key external and internal relationships, reputation, and strategic assets (cited in Villanova, Lozano, & Arenas, 2009). The authors propose that despite the fact that there are a variety of different definitions, frameworks and proposals connected to the concept of competitiveness, that there are five key dimensions: performance, quality, productivity, innovation, and image. Interestingly, when looking at company valuation as a measure of competitiveness, the authors found that instead of basing the valuation on objective ratios and measurements, they were based upon the opinion and expertise of the individual analyst performing the valuation. When looking at the European financial sector, Villanova, Lozano and Arenas found a distinct connection between CSR and competitiveness, which typically began with issues of image and reputation. CSR practices were being utilized to improve organizational image and reputation; however, once CSR practices were adopted the policies themselves prompted organizational change, such as the changing of corporate mission statements and generating new products and services.

Specification of Thesis's Main Point:

Villanova, Lozano and Arenas (2009)

argue that CSR and competitiveness relate through a learning and innovation cycle, where corporate values, policies and practices are permanently defined and re-defined. Thus (the authors) propose that learning takes place as CSR is embedded in business processes, and that once it has been integrated, in turn, it generates innovative practices, and finally, competitiveness. (p. 58)

Three Supporting Opinions/Reasons:

Villanova, Lozano and Arenas (2009) utilize the European financial sector as the industry of choice for their research regarding the nature of the relationship between CSR and competitiveness, which they surmise as a desire for competitiveness instigating CSR, followed by CSR promoting innovation which then further increases competitiveness. The authors support this thesis with the opinion that the desire to improve corporate image and reputation is the typical driving factor in implementation of CSR strategies, within an organization. Secondly, this development of strategies to enhance the company's image then leads to greater industry understanding, which is then utilized to increase competitiveness. Third, the authors surmise that the corporation's enhanced reputation is a significant driver in increased opportunities for innovation, further increasing their competitiveness.

Three Opposing Opinions/Reasons:

The three opposing opinions/reasons to Villanova, Lozano, and Arenas' (2009) thesis all center on paradoxes. The first is the strategy paradox. The strategy paradox occurs when corporate mission, vision and objectives are not compatible with CSR strategies and as such negatively affect competitiveness. Increased accountability is a facet of CSR and also a source of paradox in that "the more the company aims to be transparent and dialogue through different communication channels with its stakeholders, the more it looses the capacity to transmit a coherent and central message about the company and its vision" (p. 65), which can negatively impact competitiveness. Lastly, is the competitiveness paradox itself in that adopting certain CSR strategies, although improving competitiveness in some areas, will reduce competitiveness in other areas.

Summary: